Compat dismisses charges of cartelisation, price manipulation against jute mill owners

The Competition Appellate Tribunal (COMPAT) has set aside allegations raised by synthetic manufacturers against jute mill owners and industry officials for cartelising the market and manipulating jute bag prices. COMPAT Chairman Justice G S Singhvi delivered the order on 1 July 2016 almost five years after the allegations were first made. 

In 2011 Indian Sugar Mills Association along with National Federation of Co-operative Sugar Factories (NFCSF) and All India Flat Tape Manufacturers Association (AIFTMA) petitioned the Competition Commission of India (CCI) that Indian Jute Mills Association (IJMA) and Gunny Trades Association (GTA) officials had cartelised the food packaging market and violated monopoly sections of the Competition Act, 2002. As per law (JPMA, 1987), all food grain and sugar produced in the country are to be compulsorily packed in jute bags manufactured during the year.  In 1996 the Supreme Court upheld the Jute Packaging Mandatory Act as the `executive policy’ of the government. The COMPAT order was mostly based on the observation of Supreme Court. 

The plastic makers had levelled charges that taking undue advantage of mandatory Act, IJMA and GTA officials including some of their chairmen are actively conniving to cartelise, manipulate and rig prices of jute bags. They also challenged the rationality of maintaining JPMA in an open market driven economy.  Says a mill owner, "I was also held a devil. Now I am happy’’. Although unwilling to react on the latest development, plastic manufacturers are planning to challenge JPMA 1987 in the next step.

In May 2013, the Director General of CCI found substance on the allegations levelled against IJMA and GTA and pulled up the jute industry for cartelising and manipulating jute bag prices by misusing their dominant position in the packaging sector.